BOEMRE increases maximum civil penalty amounts

WASHINGTON – The Bureau of Ocean Energy
Management, Regulation and Enforcement (BOEMRE) announced this week that the
maximum civil penalty rate for Outer Continental Shelf Lands Act (OCSLA)
violations will increase from $35,000 to $40,000 per day; and from $25,000 to
$30,000 per day for Oil Pollution Act (OPA) financial responsibility
violations. The increases coincide with adjustments in inflation, as required
by OCSLA and OPA. The Obama administration has requested that Congress pass
legislation to further raise the maximum civil penalty rates beyond the rate of
inflation.

“Even with the inflation adjustment, which is
the limit of our current regulatory authority, our civil fine authority is
inadequate. That view is shared by energy companies operating on the OCS. The
inadequacy of our civil authority hampers our ability to effectively regulate
offshore activities, and renders such fines a trivial nuisance rather than an
effective deterrent,” said BOEMRE director Michael R. Bromwich in a statement. “Our hope is
that new legislation will raise this amount significantly, which would enable
us to use the threat and reality of civil fines as viable methods to encourage
compliance with offshore oil and gas rules and regulations and meaningfully
deter violations.”

BOEMRE can impose civil penalties when an
operator fails to correct a recorded violation or commits a violation that constitutes
a threat of serious, irreparable, or immediate harm or damage to life,
property, any mineral deposit, or the marine, coastal, or human environment.
BOEMRE also imposes fines if there is evidence that operators do not have
adequate financial responsibility to meet maximum liability amounts contained
in OPA. Fines are assessed on a maximum per day rate, but can be compounded if
there are multiple infractions.

OCSLA directs the Secretary of the Interior to
adjust the maximum civil penalty amount at least once every three years to
reflect any increase in the Consumer Price Index prepared by the U.S.
Department of Labor. BOEMRE is also authorized to impose civil penalties for
failure to comply with financial responsibility regulations that implement OPA
and those amounts are to be reviewed and adjusted on a 4-year cycle.